Federal
Register/Vol.
67, No.42/Monday,
March
4, 2002/Proposed Rules
9879
DEPARTMENT
OF
THETREASURY31
CFR
Part
103
RIN
1506-AA26,1506-AA27
Financial
Crimes EnforcementNetwork; Special
Information
SharingProcedures To Deter MoneyLaundering
and
Terrorist Activity
AGENCY:
Financial
Crimes EnforcementNetwork (FinCEN),
Treasury.
ACTION:
Notice
of
proposed
rulemaking.
SUMMARY:
FinCEN,
a
bureau
of the
Treasury
Department,
is
proposingregulations
to
implement provisions
ofthe
Uniting
and
Strengthening
Americaby Providing Appropriate ToolsRequired
to
Intercept
and
Obstruct
Terrorism (USA PATRIOT) Act of 2001
that
encourage information
sharing
among financial
institutions
and
federal
government law
enforcement
agencies
to identify,
prevent, and
deter
money
laundering and
terrorist
activity.
DATES:
Written
comments
on all
aspects
of
the
proposed rule
must
bereceived
on or
before April
3,
2002.
ADDRESSES:
Writtencommentsshould
be
submitted
to:
Special
Information
Sharing—Section 314Comments,PO
Box
1618,
Vienna,
VA
22183-1618.
Comments
may
also
be
submitted
by
electronic mail to the
following
Internet
address:
regcomments@fincen.treas.gov
with the caption in the
body
of the text,"Attention:
Proposed Rule—Special
Information
Sharing—Section
314."
Foradditional instructions on the
submission of
comments,
see
SUPPLEMENTARY INFORMATION
Under
the
heading
"Submission of
Comments."
Comments
may be
inspected
at
FinCEN
between 10
a.m.
and 4
p.m.,
in the
FinCEN Reading Room
in
Washington,
DC.
Personswishing
to
inspect
the
comments
submitted
must request anappointment
by telephoning
(202)
354-
6400 (notatoll-free call).
FOR
FURTHER INFORMATION
CONTACT:
Judith R. Starr, Chief
Counsel
(FinCEN),
(703)
905-3590;
William Langford,Senior Counselfor
Financial
Crimes,
Office
of the
Assistant
General Counsel(Enforcement),(202)
622-1932;
or Gary
W.
Sutton,
Senior Banking Counsel,
Office
of the Assistant General Counsel(Banking
&
Finance), (202)
622-1976
(not toll-free
numbers).
Financialinstitutions
with
questions
about
their
coverage
or compliance
obligationsunder
this
rule should contact their
appropriate
federal regulator.
SUPPLEMENTARY INFORMATION:
I.
Background
On
October 26, 2001, the Presidentsigned into law the USA PATRIOT Act
of
2001 (Public
Law
107-56)
(the Act).
Of
the
Act's many goals,
the
facilitation
of
information
sharing amonggovernmental entities and financialinstitutions
for the
purpose
of
combating terrorism and moneylaundering
is of
paramount importance.Section
314 of the Act
furthers
this
goal
by
providing
for the
sharing
ofinformation
between the government
and
financial
institutions,
and
among
financial
institutions themselves.
As
with many other provisions
of the Act,Congress
has charged Treasury withdeveloping regulations to implementthese
information-sharing
provisions.Section 314(a)
of the Act
requiresregulations encouraging cooperationbetween financial institutions and the
federal
government through theexchange
of
information
regardingindividuals, entities,andorganizationsengaged
in or
reasonably suspected
ofengaging in
terrorist acts
or
moneylaundering activities. Section 314(b), onthe other hand, permits
financial
institutions, upon providing notice toTreasury, to share
information
with oneanother in order to better identify and
report to the
federal
governmentconcerning activities thatmayinvolve
money
laundering
or
terrorist activities.First, utilizing me existing and
future
communication resources
of the
Financial Crimes Enforcement Network
(FinCEN),
this proposed rule seekstocreateacommunication network linking
federal
law enforcement with the
financial
industry so that vital
information
relating to suspectedterrorists and money launderers can beexchanged quickly and without
compromising
pending investigations.
FinCEN,
a
bureau
of
Treasury, alreadymaintainsa government-wide dataaccess service to assist
federal,
state,and local law enforcement agencies inthedetection, prevention,andprosecution
of
terrorism, organizedcrime, money laundering, and other
financial
crimes. Undertheproposedrule, federal law enforcement will have
the
ability
to
locate accounts
of, and
transactions conducted by, suspected
terrorists or
money launderers
byproviding
their names and
identifying
information
to
FinCEN,
which will thencommunicate that
information
tofinancial
institutions
so
that
a
check
of
accounts and transactions can be made.
If
matches
are
found,
law
enforcementcan then
follow
up with the financialinstitution directly. The rule is intended
to
formalize
and
streamline
theinformation
sharing and reportingprocess that the federal governmentundertook
following
the
attacks
of
September
11,
2001,bypermitting
FinCEN
to
serve
as a
conduit
forinformation
sharing between
federal
lawenforcement
agencies and financialinstitutions.
FinCEN is
uniquely positioned
to
serve as the communication gatewayunder section 314(a). Indeed, it alreadyprovides considerable informationrelating to financial crimes to the
financial
community
in a
variety
of
ways. It issues Suspicious Activity
Report
(SAR) Bulletins,
which
digest
information
drawn
from
SARs
to
illustrate indicia
of
suspicious activity,and SARActivity Reviews, whichpresent trends, tips
and
issues
in
suspicious activity reporting. FinCENissues advisories to alert the financialcommunity to specific activities andareas that merit enhanced scrutiny,including countries withlaxanti-moneylaundering controls. In addition,
FinCEN
provides industry guidanceonits website. The financial servicesindustry also makes substantial use of
FinCEN's
regulatory helpline.Second, Congress authorized thesharing
of
information among financialinstitutions relating to suspectedterrorists and money launderers only
after
providing notice
to
Treasury,
forthe
purpose
of
identifying
and
reporting
to
thefederal government suchactivities. The notice provision outlinedbelow—a yearly certification to FinCENthat information will be shared andprotected
from
inappropriatedisclosure—combinedwith
the
requirement that any money laundering
or
terrorist activities uncovered bereported to FinCEN or other law
enforcement,
will allow
for the
sharing
of
information while protecting
the
privacy interests
of
customers
of
financial institutions. Given theimportance
of
this
information sharingprovision, Treasury is issuingsimultaneously an interim ruleimplementing section 314(b), which ispublished elsewhereinthis issueof the
Federal Register.
The regulatory
text
of
the
interim rule
and
this
proposed ruleare identical with respect to section
314(b).
Nothing in this proposed rule
affects
the
existing authority
of
federal agencies
to
obtain information directly
from
financial
institutions,
as
authorized
by
law
or regulation, pursuant to their ownestablished and approved procedures.
Moreover,
nothing in the proposed rule
affects
a
financial institution'sobligation
to
file
a
SAR,
or its
duty
to
contact directly a federal agencyconcerning individuals or entitiessuspected
of
engaging
in
terrorist acts
or
moneylaundering activities.
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